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Thread: How to become wealthy by investing

  1. #1
    Enthusiast lrkasbekar's Avatar
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    Default How to become wealthy by investing

    Today investor has become a rare breed or practically extinct like the dinosaurus. This is because people tend to confuse between a trader and an investor. All the news in the media highlighting people making money or losing money are usually traders. Here we find out the difference between a trader and an investor and how to build wealth by investing.

    A trader is a person who buys and sells stocks frequently. He is interested in making money and not building wealth. He looks at the various price charts while taking his decisions. He is least interested in company fundamentals like company's assets, liabilities, order book, growth prsopects etc.

    An investor on the other hand is not worried about the stock price. He concentrates on the order books, growth prospects, assets, debt and other company fundamentals while taking decision. Various charts have no meaning for him. He is in the market for a long haul.

    Unfortunately both brokers and government love traders. This is because every time you churn your portfolio implies commission to the brokers and more tax for the government. Also media loves traders because when the market crashes, they can print headlines like "Investors lose xxx crores on Black Friday" or "Investors should avoid the markets as the markets are likely to bottom out further." This creates sensationalism and the media gets eyeballs.

    But if you are looking to be wealthy, always be an investor. Here is how to be a smart investor.

    1. Focus on the company fundamentals instead of the price movement of the stock.
    2. Avoid concentrating your portfolio by buying companies operating in just one sector. This was evident in the recent market crash when people bought stocks of just realty and infrastructure companies while ignoring other sectors. When both these sectors were adversely affected, these people also lost money.
    3. Avoid small and mid-cap stocks. These stocks can give you more than 100% returns but can become very illiquid and lose their value when the market crashes.
    4. Be in the market for a long haul. Your time in the market is more important than timing the market. Those who bought Infy stock in 1994 for Rs 95, today have become millionaires.
    5. Ignore the noise. Noise is the useless, irrelevant information that is highlighted by so-called media and stock analysts. E.g. the recent appreciation of rupee against dollar led to a sharp decline in the stock price of various IT companies. But despite that many top IT companies have managed to give outstanding profits.
    6. Invest the money that you won't need for next 10 years. Warren Buffett says it the best, when he states, "I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years."
    7. Follow what Warren Buffett says, "If a business does well, the stock eventually follows." Hence look at the business model rather than complex charts.
    8. Don't go for businesses or investment products that you don't understand.

    Investing is a long term game. Unfortunately with greed getting better of investors, they tend to listen to the useless information and behave like traders. Is it any wonder they don't become wealthy from stocks?

  2. #2

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    Very practical tips, got much values of investment methodology in your writing contents. Complete with method of statement on trader and investor, the differentiations running in the same house of capital market. Mine, TATA.COMM & ICIC Bank, I stay tune only on the both for my third-quarter fiscal year of my stock investment in India. Their ROI in slow respond but strong in term of longevity.
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    New Member jakescott88's Avatar
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    Thank You for that great post! I think we can be wealthy by investing on the right stocks that will gain a big value in the future. This is can be done by studying the stock market trend and the nature of the stock in which you want to invest.


  4. #4

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    There are 7 common factors to those who build net fortunes of one million dollars or more. In America there has never been more personal wealth than there is today yet most American’s are not wealthy. Amazingly a mere 3.5% of our households own almost one-half of the wealth in the United States! Although we may be hard working, educated, moderate to high-income earners, few of us are affluent. A pattern that the wealthy follow is more often the result of planning, hard work, perseverance, and self-discipline - that determines who becomes wealthy.

  5. #5

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    Infact everybody are looking into fast money and one can never wait for long term profits anytime now as they all want fast profits

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    New Member Chola's Avatar
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    Quote Originally Posted by alenstar31 View Post
    Infact everybody are looking into fast money and one can never wait for long term profits anytime now as they all want fast profits
    Yep. Only long-term investors will be awarded handsomely, and they'll be the only ones who have the final laugh.

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    Investment in stock market is not very difficult . But earning good returns here is a bit difficult. Traders should give importance to both fundamental and technical analysis. As both are equally important.

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    Quote Originally Posted by priya0710 View Post
    Investment in stock market is not very difficult . But earning good returns here is a bit difficult. Traders should give importance to both fundamental and technical analysis. As both are equally important.
    Definitely, fundamental as well as technical knowledge of share market is very important to earn a positive outcome or we can say that to fulfill our investment goal we have to be an expert of trade market and to become a leader you can take help of market experts or you can do self learning to polish your trading skills.

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    Quote Originally Posted by priyarajput2017 View Post
    The trader buys and sells the stock and he sells the money, he sees the different value charts during his decision, he is less interested in the company's fundamentals like property, liabilities, order book, growth prospect, etc.
    blah..blah... No one gets wealthy by spamming the forum. If you are here to pollute the forum, get out and go somewhere else!
    Be Happy. Just Enjoy Your Life!

  10. #10
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    People can earn a good amount and become wealthy easily by investing in share market but he has to follow some important rules of market and latest trends of the market. There is one important thing that a trader can earn a good profit if he know how to control his loss and how to manage his risk in share market.

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